Soul Patts lifts dividend despite weaker profit

Diversified investment company
Washington
H. Soul Pattinson has increased its interim dividend despite a decline in interim earnings as a result of mixed contributions from key investments.

A steep profit decline by New Hope, partly offset by higher earnings from TPG Telecom and Brickworks, resulted in the net profit falling to $63.5 million from $80.5 million in the six months to January.

The company’s interim dividend was raised to 19¢ from 18¢ on earnings a share of 30.8¢ compared with 31¢ earned a year earlier.

WHSP, one of Australia’s oldest listed companies, owns significant stakes in a range of businesses including 59.7 per cent of coal and energy group New Hope, 23.5 per cent of agribusiness company
Ruralco
Holdings, 44.3 per cent of building products group
Brickworks
and 26.9 per cent of Australia’s third biggest telco
TPG
Telecom.

WHSP chairman
Robert Millner
- who also chairs Brickworks - said result was broadly in line with the same period last year.

“Importantly we have seen a steady increase in the market value of our listed equity investments, which is a positive sign that investors are returning to the market. We maintain our focus on diversification," Mr Millner said in a statement.

“WHSP remains in a strong financial position with cash reserves including wholly-owned subsidiaries of $180 million."

Equity stakes

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As at January 31, the market value of WHSP’s listed equity stakes, including associates and controlled entities, was $4.66 billion, an 11 per cent increase on the same period last year. The cost of acquiring these stakes was $851.5 million.

WHSP has recently been subject to calls from shareholder Perpetual to break up its cross-shareholding with Brickworks.

WHSP owns 44 per cent of Brickworks and Brickworks owns 43 per cent of WHSP.

The structure is no longer allowed under the Corporations Act and give the Millner family the ability to control both companies without owning a majority of the shares.

Perpetual head of equities Matt Williams has enlisted the help of high profile banker Mark Carnegie - who was given a $30 million option by Perpetual - to push the Millner family to unwind the structure.

Perpetual owns about 12 per cent of both Brickworks and WHSP and Mr Williams believes the break-up will unlock billions of dollars in value in the underlying assets that is not being represented in the share prices.

Mr Williams has voted against the Brickworks remuneration report and has called an extraordinary meeting to have shareholders vote on the break-up plan, but the meeting has been delayed several times.